Marketplace lending: special focus
Euromoney's latest coverage of the marketplace lending industry.
As these platforms hit their first setbacks they have many questions to answer over their business models, underwriting competency and regulatory compliance.
Euromoney goes behind the headlines about marketplace lending to examine the robustness of online consumer lending, how securitization is becoming the funding mechanism of the industry and what the regulators might now do to quell the market's concerns over the growing pains of this industry.
Ex-Lending Club chief poised to retry securitization; technique ‘essential’ to online lending business.
Euromoney has reported at length on the growing pains of marketplace lenders, some of the biggest fintech companies to have emerged in the much larger US market, including several that have already floated publically and saw their share prices collapse last year.
Capital markets activity in Europe is dominated by the UK, so the Brexit vote could have dealt a mortal blow to the European Commission’s plans to promote it through the capital markets union initiative. To survive, CMU will have to get global.
Cheerleaders for marketplace lending took comfort from two events in late May that seemed to signal a potential recovery in a sector that had been rocked by the near failure of Lending Club, the leading listed specialist in online lending.
Profit windfalls from GSEs evaporate; SoFi approved to become seller and servicer.
Jefferies deal scuppered by loan date changes; Laplanche, Mack investors in Cirrix fund.
May 2016 Renaud Laplanche out and three senior managers either fired or resign after ‘violation of business practices’.
Rhydian Lewis, co-founder of UK marketplace lender RateSetter, is calling for the death of banking as we know it, and visited the House of Commons in London in April as part of his campaign.
If risk retention was attached to the marketplace lenders, the business model would shift abruptly and prematurely select winners and losers not by the underwriting competencies but by their ability to attract low-cost sticky capital - Ram Ahluwalia
As Prosper fires a quarter of its workforce, the gulf between legacy lenders and pure technology plays grows ever wider.
Many investors in marketplace lending have learned the hard way about volatility in sub-prime credit.
After a record year for fund raising, large fintech companies are now emerging in marketplace lending and payments, with many more newcomers deploying venture capital money raised in $25 million to $50 million chunks to transform capital markets and traditional banking mainstays such as mortgage lending. The fintech start-ups are building revolutionary applications for blockchain, attacking every specialist niche in the financial world and keeping the image of fintech clean with business ventures aimed at inclusion.
Specialist small business lender grows fast; more banks seek to white label its offering.
The fintech darlings of online lending are becoming victims of their own success. Questions over loan performance and industry structure have put the young sector firmly in the regulators’ sights. What started out as a market known for its transparency is becoming increasingly complex, not least through the growing use of securitization and involvement of the biggest banks and asset managers. Marketplace lending needs to grow up fast.
WebBank of Salt Lake City, Utah; Cross River Bank of Teaneck, New Jersey; NBT Bank of Norwich, New York and Comenity Capital Bank of Columbus, Ohio: these are hardly household names. But their involvement with the new breed of online marketplace lenders has arguably been far more important than that of the likes of JPMorgan and Citi.
In May 2015, UK upstart Metro Bank forged an alliance with marketplace lender Zopa, the first such tie up in this market and a potential blueprint for other UK challenger banks to take on the high-street incumbents.
KPMG and CB Insights reported last month that there are now 19 fintech unicorn companies of which 14 are providing payments or marketplace lending - Fintech revolution
Deutsche Bank mandated for Reg-S sterling deal.
Marketplace lending ABS is following a worryingly familiar path.